Friday, May 23, 2008

The power of a merchandising idea, brilliantly conceptualised and executed, truly knows no bounds. In fact, it can decisively tilt the advantage in your favour

When it comes to football clubs “Real Madrid” is now the richest club, beating Manchester United, who were the richest for 8 years and for the first time slipped to the second spot. Real Madrid, which won the Spanish Liga last season, saw its revenues leap 20 percent to 351 million euros during the 2006/07 season, while Manchester United posted revenues of 315 million euros, (according to a survey done by the accountancy firm Deloitte). One of the main reasons for Real Madrid’s increase in revenues was David Beckham. It is not so much the number of goals he scores but the number of shirts he sells, which makes him such a hero among marketers and fans alike.

Real Madrid had great players, but that’s not enough in today’s world. It needed someone who could bring sponsors to their stadium. It needed someone who could charm and entertain the spectators with his skills on the field. It needed David Beckham and didn’t hesitate to pay a huge price for him. Real Madrid’s revenues from club merchandise (shirts, caps et al) jumped 67 percent in Beckham’s first season alone. Suddenly, Real Madrid started earning more from tickets sales, television deals and other promotional activities. Its overall commercial income, which includes money deals from sponsors like Adidas, Pepsi et al now stands at £80 million a year. When Beckham was with Manchester United, it was the richest club; today it’s Real Madrid. This is the “Beckham effect” and marketers & merchandisers are loving it.

Yao Ming, the very popular Chinese basketball player, was purchased by an American basketball club. The reason? They had no reach or influence in the Asian market and Ming could help them get it, for soon after Ming’s transfer NBA (National Basketball Association of America) opened merchandise stores all over Asia. Looking at NBA’s success, Seattle Mariners purchased Japanese National Baseball player Ichiro. Tourist flow from Japan has increased significantly to Seattle since then. Not to mention the fact that Ichiro merchandise happens to be one of the top selling merchandise in the league!

Merchandising all the way

Back in the 80’s, Steven Spielberg made a film on a relatively small budget of $10 million. The movie grossed $12 million almost in its opening weekend. However what’s more spectacular is the fact that it set a new standard for movie merchandising. The children went crazy buying everything from its pyjamas to lunchboxes to alarm clocks to bubble gums – whatever was on offer. You guessed it… the movie was “E.T.”, which made $1 billion in merchandise revenue alone.

Merchandising is developing into a big money spinner, which can’t be ignored any longer. Think of it, Spiderman alone accounted for some $132 million in merchandise revenue last year. Saawariya might not have worked well at the box office inspite of Ranbir Kapoor’s “towel-tease-act”, but Big Bazaar is grinning. Saawariya branded white towels did better sales than the movies weekend box-office ticket-sales. A successful movie means millions but much of this money comes not from ticket sales or even video rights but from licensing and merchandising – more so in the animated ones. Look at how intelligently Warner Brothers used its DC Comics characters Batman & Superman. Before 1989, Batman movies averaged at less than $120 million a year in merchandising revenue. Since 1989, the company has sold more than $4 billion in Batman merchandise.

Not just movies, merchandising seems to work well for a whole lot of other businesses too. Today it’s become an invaluable marketing tool. It helps increase the brand exposure.

Bollywood too, slowly but surely, is waking up to the market potential of merchandising. A trend was started by the Barjatyas back in 1994 when they tied up with Archies for merchandising their blockbuster “Hum Aapke Hain Kaun.” If Spiderman sold goods worth Rs.1.2 crore in the Indian market, then Hanuman figures made Rs.1 crore. If Salaam Namaste made funky coffee mugs popular then “Krrish dolls” were loved by kids. Jadoo tried to do an E.T. and brought out tiffin boxes and stationery, which did decent business. The trend is picking up in India too. Not surprising then, that Yash Raj has launched a new division – Yash Raj Films Merchandise, and Reliance Big Entertainment, a new player in moviedom, is already charting out detailed merchandising strategies. It has already started working on various merchandising options as it readies to start work on its Rs.65 crore, 3D animation movie “Sultan” starring Rajnikant. In animation (the biggest money spinners of today) especially, 18-20 percent of the films’ revenues are from the box office; the rest come from merchandising and Indians too are realising this. Gone are the days when you went to your neighbourhood tailor with a photograph of a dress worn by a heroine and asked him to replicate it. Today you can walk into a Pantaloons (Kkrish) or Shopper’s Stop (for Om Shanti Om) or Pepe (Dhoom 2) and pick up your favourite.

It’s a fashion of passion

Merchandising allows fans to convey their passion and appreciation. Be it sports or movie stars or animated characters, this is one business, which attracts people of all age groups, class, colour & gender alike.

Teenagers have always been huge fans of sporting merchandise; wanting to wear their favourite player’s jerseys. Nike made fortunes with its Air Jordan range; Adidas and its Greg Norman range of golfing accessories are a hit among the middle-aged.

Merchandising is a reflection of the passion the fans feel for their stars. When Britney was at the peak of her career, her merchandising sales averaged $150,000 to $170,000 for each night of her American tour. Many artists are using this to quickly leverage the height of their fame. Jennifer Lopez has her own clothing line, her own perfume brand, which does brisk business for her.

The Indian Premier League (IPL) is hoping to generate the same amount of fervour as football clubs of Europe or the English Premier League. They are hoping that IPL merchandising will catch on too. So Videocon, whose brand ambassador is Shahrukh Khan, plans to retail Shahrukh branded T-shirts, sunglasses, travel bags et al in its retail stores like Next & Planet M., Shopper’s Stop, Reliance Retail too are working out plans around IPL merchandise.

Great ideas, popular faces is what merchandising is all about. After all, Harry Potter is not just a popular book series, which made its author J. K. Rowling a billion dollars, but it’s also a toy-merchandising machine, which helped the toy company Mattel sell Potter paraphernalia worth $150 million, it also helped Johnson & Johnson sell band-aids and cologne!

Fashion for a cause

Cause-related merchandising is now a big hit with consumers. Recently, Laura Bush launched a jute-bag exclusively in Harrods which said “buy this it would help feed two children for a year in Africa.” Last year Audrey Hepburn’s Children’s Fund organisation launched a simple canvas bag for $825. These limited edition “Audrey Bags” were made to help children and even though priced ridiculously high they sold well.

However if there is one face that can sell anything, anywhere in the world, it is that of a revolutionary. It’s of the Argentinian superhero Che Guevara – a communist who fought for justice. Today a “Che-t-shirt” has become a symbol of protest of rebellion against the abuse of power. When Lebanon protested against Syria, the people carried images of Che. When soccer hero Maradona went to visit Hugo Chavez, the communist leader of Venezuela, he showed-off his Che tattoo!

A 1961 photograph of Che taken by photographer Alberto Korda has today become one of the century’s most recognisable images and has found its way to a vast array of merchandise. Not many may know the man, his enigma, his philosophy, but many own a Che t-shirt.

A Che t-shirt is today a universal symbol of romantic rebellion. That’s the power of a great merchandising idea.

Fashion is taking on a whole new meaning today. It’s become a way of not just showing the world how you are looking but also how you are feeling. So design your merchandise intelligently and market it well. It has the power to take on the world. For a great idea knows no barriers… remember the appeal of a Che t-shirt.

Thursday, May 8, 2008

Banking on just 30-second TV slots for promoting your brand and selling your wares is passé. Marketers globally and in India are discovering that it’s time to make a real connect with the discerning consumer...

On Tuesday, April 8, Starbucks gave away free 8 oz cups of Pike Place Roast – (a new Coffee blend) at more than 7,000 US stores. The event was more than just free coffee distribution but a “coffee tasting” experience according to Starbucks. Customers were instructed to smell, then slurp (which enabled the subtle flavours to reach your nose), then taste and then describe the whole experience. With the help of this event the company attempted to connect with the customers. It wanted them to not think of Starbucks as a corporation, but as a place where you have the most fabulous coffee drinking experience.

A recent poll revealed that a lot of consumers felt that the Starbucks brand is no longer fashionable, no longer in vogue. The name seems to have lost its cool. Some say Starbucks, which rose in popularity on the basis of its claim to be committed to ethical coffee sourcing has, along the way, lost its heart. One reason could be its very rapid growth, which turned off many consumers. Another reason could be its quickly eroding competitive advantage. Today, everyone right from McDonalds to other coffee houses have similar flavours and product offerings as those of Starbucks. To top it all everyone now claims to sell ‘ethical’ coffee! In a desperate bid to climb back on top of the popularity ladder, early this year, Starbucks sacked its CEO Jim Donald and brought back its original founder Howard Schultz. Schultz soon realised it was a series of below-the-line (BTL) activities that could slowly nurture back the good-ol’ reputation of the brand. From making sure that the outlet smells of roasting coffee, by banning the sales of hot breakfast food (which was masking the smell) to giving away free samples of its new coffee flavour, Schultz is doing it all. If distributing free coffee was not enough, the company now plans to give away free coupons every Wednesday (till May 28) in USA … their logic... not everyone could make it to the big event on April 8, when they distributed free coffee. The company upped its advertising budget from $38 million in 2006 to $68 million in 2007, yet it knew that just advertising is going to take it nowhere. It needed events that could be customised, made more interesting and hence generate greater impact on the target audience. Come to think of it, till very recently Starbucks did not see the need for such activities… competition made it rethink.

Decades ago, on April 22, 1970, Earth Day was celebrated, to draw the attention of the world toward things that were harmful to the earth and the environment. Today, according to Advertising Age, Earth Day is the new Christmas when all companies paint themselves green to help raise awareness, but more so to raise their sales. Today, any day of any significance (and believe me there are a whole lot of them) is a marketing event. Be it Earth day, Halloween Day, Friendship Day, Grandparents Day…whatever. From enviro-friendly toys, to reusable bags, to green tea to even Barbie, everything goes green during the Earth Day week and gives marketers the chance to organise huge events to promote the cause and their sales too.

Remember a cricket match played a few days back in Kolkata? I would not blame you if you cannot recall the names of the teams or the players except Shah Rukh Khan. After all it was not the game, but the before and after activities that caught the fancy of the nation. From eye-boggling cheer-leaders, to fireworks, to celebrity line-ups, the match had it all. Cricket was incidental. Shah Rukh Khan’s amazing promotions surely won him the ‘man-of-the-match’ title. That’s the power of BTL. It can entertain you and charm you into remembering the product or service. It gives you reason to discuss the brand, something every marketer dreams of.

ATL or BTL

The novel Da Vinci Code released in March 2003 with just 85,000 copies. Apart from its controversial contents, it was the word-of-mouth that shot it to the No.1 position on the New York Times Best Seller List, where it remained for fourteen consecutive weeks. When it was made into a movie, Sony Pictures used innovative BTL activities. In association with Google, it displayed puzzles that were time-bound on the website. A new puzzle was put up everyday. The first 10,000 participants who correctly solved all 24 daily puzzles were then chosen for the mega prize. The grand prize winner received a first-class trip to each of the prominent locations featured in the movie, apart from various Sony products. This way Google got its hits and Sony got sales of movie tickets.

BTL activities create buzz and attract the attention of the target audience. Pepsi organised an inter-school cricket event for 425 schools across 14 cities, which worked wonders for it. This was the exact age group they wanted to target. Mass advertising is more general in its appeal, whereas through BTL you can focus your efforts better, customise better.

One day on the National Highway 8 of Delhi, people saw an athlete jogging for a whole day on the treadmill. It was Nike’s way of promoting its sportswear.Talk of grabbing eye balls… I’m sure no one on that highway missed this one. LG, which is celebrating the completion of its 11th year in India and has hardly ever indulged in BTL activities, was for the first time seen participating in the Delhi Shopping Festival to help improve its brand visibility.

The FICCI-PricewaterhouseCoopers annual report 2007 estimated that BTL spending in India is at Rs.9 billion and is expected to grow to Rs.19 billion by 2010. In India, we still haven’t explored the numerous new & unique ways of doing BTL. Indian brands have played it safe with conventional forms of BTL like events, road shows, sampling, exhibitions et al.

However there is a lot more to it. Word of mouth, viral marketing, podcasting etc. The scope of BTL is increasing day by day, as compared to above-the-line (ATL), which basically includes all forms of mass communication like advertising. And marketers are increasingly choosing BTL because it works and how.

Why BTL works

Recently Tata Tea increased its budget for BTL activities to help increase its volumes. Rasna too doubled its spend on consumers promotions. Dabur foods is equally splitting its ad budget (50:50) for advertising & promotions & so is ITC.

Until recently, companies never took BTL seriously. A few engaged in short term sales oriented activities, sometimes even in rural areas, when they saw their bottomlines in red. That outlook is changing. Today, below the line is growing almost 200% faster than traditional advertising. BTL is more measurable and can be fine tuned to suit the different customer groups – much more than advertising. The increase in clutter is making it very difficult for advertisers to get noticed by customers who matter the most. Moreover, everyone is looking for measurable, quantifiable investments, making BTL the best option available for marketers.

Vodafone and Fever 104 planned a “Vodafone Fever” contest where every 104 minutes, one had the chance to win Rs.104,000! Whenever the RJ called, the contestant was supposed to say “Vodafone Fever” instead of “Hello”. This way, both companies reached their target audience in a jiffy. Kaya Skin Clinic finds it profitable to organise workshops & events on skincare for its customers. This way it generates more business from its existing customers.

Moreover, today companies are constantly looking for new customers, which is taking them to cities other than the metros. Here media options are not as varied as in the metros forcing companies to come out with innovative marketing activities and hence increase their focus on BTL. Big marketers like Hindustan Unilever agree that a country as diverse as India needs not just mass advertising, but also a whole lot of localised promotions.

According to Ranjan Kapoor, Managing Director, O&M, “Advertising alone doesn’t build a brand.” Below-the-line can do things for your brand, which traditional advertising fails to do. For one, it gives customers a first hand experience of the product.

Samsung discovered BTL activities like product demonstrations & cookery classes helped in making people familiar with the concept of its microwave ovens and eventually helped in the sales too. BTL helps you reach the audience on a one-to-one basis.

Remember you don’t need to always use all your marketing budget on advertising. An intelligent combination of both below and above the line marketing techniques can do wonders for your sales. So before finalising your marketing plan don’t forget to look below!

About Me

Rajita Chaudhuri is the Dean , Center for Higher Education @ IIPM. She is the Consulting Editor of '4Ps,Business&Marketing' magazine and 'MYOD'. She is the winner of the "Best Faculty in Marketing".Her passion is teaching.

Prof. Rajita Chaudhuri speaking at 'Thorns to Competition' book launch

IIPM 4Ps Bschool Quiz with SRK

Prof. Rajita Chaudhuri's Executive Communication Class - April 2011

Prof. Rajita's Class on Team Building

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